Question

In which of the following markets do you expect efficient outcomes? Explain your position. Your answer to each question should not extend beyond 3 to 5 sentences (i.e., short succinct answers are preferred).

a. Hurricane insurance for beach houses in Florida.

b. Medical insurance.

c. Stock market.

d. MP3 players including iPods.

e. Student loans.

f. Housing.

Answer 1

Ans-Analysis of following markets where one can expect efficient outcomes:-

(a)- Hurricane insurance for beach houses in Florida- A home insurance policy is the first way to protect your home against a hurricane and the second half of "hurricane insurance" is a flood insurance policy, which covers one thing, and that is the damage to your home and your possessions caused by an external flood. This insurance policy scheme is not in running nowadays investment will not emerge as an efficient outcome.

(b)- Medical insurance- it is a type of insurance taken for availing medical facility in the event of uncertainty. The amount will be claimed on the event only and not otherwise. one can indulge himself in this type of business but profit from this business is not stable all the time. Here nvestment will not emerge as an efficient outcome.

(c) Stock market- A stock market, equity market or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately. This type of investment would yield yearly return up to 15-20% which is sufficient for efficient outcomes.

(d) Mp3 player including pods- this is not considered as an investment it is purchased for enjoyment only for one's personal desire only and now a market of Mp3 player is decreasing day by day so it is advisable not to do markets for selling the mp3 player as it will not yield any income in near future. hence investment in this market will not yield efficient outcomes.

(e)- Student loans- this loan policy are very much popular and providing loans to the student is consider as a good task but receiving interest sometimes become difficult. if interests are not recoverable how one can expect repayment of principal amount. hence investment will not yield efficient outcomes.

(f)-Housing- one can think about to invests in the house because it yields a wealthy return of around 40-50% return here investment will provide sufficient outcomes.

Conclusion- housing is the best market where one can expect for efficient outcomes.